SelectQuote Inc (NYSE:SLQT) Posts Q1 Revenue Beat and Narrower Loss, but Shares Tumble on Segment Weakness

SelectQuote Inc (NYSE:SLQT) reported financial results for the first quarter of fiscal year 2026, delivering a mixed performance that saw revenue exceed analyst expectations while losses persisted. The company's stock experienced significant volatility in pre-market trading following the announcement, reflecting investor uncertainty as they digested the nuanced report.

Earnings and Revenue Performance Versus Estimates

The insurance and healthcare services provider posted consolidated revenue of $328.8 million for the quarter, surpassing analyst estimates of $325.4 million. This represents a 12.5% increase compared to the $292.3 million reported in the same quarter last year.

However, the company's bottom-line results told a different story. SelectQuote reported a consolidated net loss of $30.5 million, which showed improvement from the $44.5 million loss in the prior year period. On a per-share basis, the company reported a loss of $0.26, which was better than the analyst estimate of a $0.33 loss per share.

Key financial metrics from the quarter include:

• Revenue Beat: $328.8 million actual vs. $325.4 million estimated
• EPS Performance: ($0.26) actual vs. ($0.33) estimated
• Year-over-Year Revenue Growth: 12.5%
• Net Loss Improvement: Reduced from $44.5 million to $30.5 million

Market Reaction and Price Action

The market reaction to these results was sharply negative, with shares falling approximately 14.8% in pre-market trading. This decline occurred despite the company beating both revenue and earnings estimates, suggesting investors may be focusing on other aspects of the report, including the company's adjusted EBITDA performance and segment-level challenges.

Segment Performance and Business Highlights

The company's three reportable segments showed divergent results, highlighting the evolving nature of SelectQuote's business model.

The Senior segment experienced significant headwinds, with revenue declining 37% to $59.0 million compared to $92.9 million in the prior year period. This segment posted an adjusted EBITDA loss of $21.0 million, a substantial deterioration from the $7.7 million profit in the same quarter last year. The decline was primarily driven by lower Medicare Advantage submitted policies, which decreased 31% year-over-year.

In contrast, the Healthcare Services segment demonstrated strong growth, with revenue increasing 42% to $221.4 million. This segment generated adjusted EBITDA of $7.2 million, up 48% from the prior year. The growth was fueled by a 24% increase in SelectRx members, which reached 106,914, and a 25% increase in average prescriptions shipped per day.

The Life segment delivered solid performance with revenue growth of 19% to $46.6 million, though adjusted EBITDA decreased 7% to $5.6 million due to margin compression.

Management Commentary and Outlook

CEO Tim Danker emphasized the strength of the company's integrated healthcare model and noted that SelectQuote achieved an all-time high revenue to customer acquisition cost ratio of 6.4x, nearly 40% higher than a year ago.

Regarding forward guidance, management maintained its fiscal 2026 outlook of $1.65 to $1.75 billion in revenue and $120 to $150 million in adjusted EBITDA. This company guidance compares favorably to analyst estimates of $1.74 billion in sales for the full year.

The company did acknowledge temporary headwinds in its Healthcare Services segment, expecting adjusted EBITDA around breakeven for the segment in the fiscal second quarter due to reimbursement rate challenges. However, management anticipates the segment will exit fiscal 2026 at an adjusted EBITDA run rate in the $40 to $50 million range.

Conclusion

SelectQuote's first quarter results present a complex picture of a company in transition. While the top-line performance exceeded expectations and the company continues to show progress in reducing losses, the market's negative reaction suggests concerns about the sustainability of the growth trajectory, particularly given the weakness in the core Senior segment. The maintained guidance provides some confidence in management's ability to execute on its strategic vision, but investors will be watching closely for signs of improvement in the Senior business and resolution of the temporary headwinds in Healthcare Services.

For more detailed earnings analysis and future estimates, review the earnings and estimates data for SLQT.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any securities. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.